My bank has deducted tax on my fixed deposit interest and I was told the limit had gone up. My father is a senior citizen and his bank deducted too. There is also a loan I took from a friend on which I pay interest, and a co-operative society that pays me interest on a deposit. Who exactly has to deduct under section 194A, on what amount, and what are the limits as they stand now?
Section 194A requires any person who is not an individual or a Hindu undivided family, and who pays a resident interest other than interest on securities, to deduct tax at the rates in force at the time of credit or payment, whichever is earlier. An individual or HUF is drawn in only by the proviso to sub-section (1), and only if total sales, gross receipts or turnover exceeded one crore rupees in business or fifty lakh rupees in profession in the preceding financial year. Section 194A(3)(i) sets the thresholds. From 1 April 2025 they are fifty thousand rupees where the payer is a banking company, a co-operative society carrying on banking business or a post office deposit scheme, one lakh rupees where the payee is a senior citizen, and ten thousand rupees in any other case — each figure substituted by Act No. 7 of 2025, the Finance Act, 2025. Section 194A(3) also carries the exclusions: interest paid to a banking company, a financial corporation, the Life Insurance Corporation, the Unit Trust of India or an insurer under clause (iii); interest paid by a firm to its partner under clause (iv); the co-operative society exemptions in clauses (v) and (viia), which since 1 April 2020 are switched off only where both conditions in the proviso are met — the society's turnover exceeded fifty crore rupees in the preceding financial year and the interest to that payee crossed one lakh rupees for a senior citizen or fifty thousand rupees for anyone else; and the two Motor Accidents Claims Tribunal limbs in clauses (ix) and (ixa), where interest credited is never liable and interest paid is liable only above fifty thousand rupees in the financial year — a figure the Finance Act, 2025 did not move. Section 197A(1A) and (1C) let a payee stop the deduction by declaration — Form No. 15G, or Form No. 15H for a resident individual aged sixty or more, both prescribed by rule 29C. From 1 April 2026 the Income-tax Act, 1961 was repealed by section 536 of the Income-tax Act, 2025; the successor is section 393(1) of the 2025 Act, whose Table carries the same three figures.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2025-04-01, reported as Section 194A of the Income-tax Act, 1961, as amended up to 2026. It bears on section 194A, section 194A(1), section 194A(3)(i), section 194A(3)(v), section 194A(3)(viia), section 194A(3)(ix), section 194A(3)(ixa), section 197A, section Rule 29C, section 206AA, section 197, section 44AB, section 36(1)(viii), section 10(23FC), section 193, section 201(1), section 201(1A) of the Income Tax Act 1961, in TDS Defaults, Refunds, Interest & Condonation and How Tax Law Is Read matters.
The thresholds moved on 1 April 2025 and almost every number in the section moved at once. A bank customer who was over the limit in 2024-25 at forty thousand rupees may be under it in 2025-26 at fifty thousand; a senior citizen's limit doubled from fifty thousand to one lakh; and the ordinary limb — the one that catches interest on a private loan, on money owed to a supplier — went from five thousand to ten thousand. Run a 2024-25 check on 2025-26 figures, or the reverse, and you get the answer wrong in both directions. The same Finance Act did not touch the fifty thousand rupee figure for interest paid on a Motor Accidents Claims Tribunal award, so that one is unchanged and easy to get wrong by assuming it followed the others. For a co-operative society the question is no longer whether the payee is a member. Since 1 April 2020 a society whose turnover crossed fifty crore rupees in the preceding year deducts on interest to a member like any other payer, once the interest to that payee crosses one lakh rupees for a senior citizen or fifty thousand rupees for anyone else — both conditions have to be met, not either. A society that has grown past fifty crore rupees and is still relying on clause (v) is in default under section 201(1) and running interest under section 201(1A). And from 1 April 2026 all of this is being read out of a repealed Act: the live provision is section 393(1) of the Income-tax Act, 2025, which carries the same three figures in a Table.
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The operative statutory text of section 194A of the Income-tax Act, 1961, as it stands after the amendments made with effect from 1 April 2025. MARGINAL NOTE: “Interest other than ‘Interest on securities’”. SUB-SECTION (1) “194A. (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income by way of interest on securities, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force: Provided that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed one crore rupees in case of business or fifty lakh rupees in case of profession during the financial year immediately preceding the financial year in which such interest is credited or paid, shall be liable to deduct income-tax under this section. Explanation.—For the purposes of this section, where any income by way of interest as aforesaid is credited to any account, whether called ‘Interest payable account’ or ‘Suspense account’ or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.” SUB-SECTION (2) Printed as omitted: “[Omitted by the Finance Act, 1992, w.e.f. 1-6-1992.]” SUB-SECTION (3), CLAUSE (i) — THE THRESHOLDS “(3) The provisions of sub-section (1) shall not apply— (i) where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the person referred to in sub-section (1) to the account of, or to, the payee, does not exceed— (a) fifty thousand rupees, where the payer is a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution, referred to in section 51 of that Act); (b) fifty thousand rupees, where the payer is a co-operative society engaged in carrying on the business of banking; (c) fifty thousand rupees, on any deposit with post office under any scheme framed by the Central Government and notified by it in this behalf; and (d) ten thousand rupees in any other case: Provided that in respect of the income credited or paid in respect of— (a) time deposits with a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); or (b) time deposits with a co-operative society engaged in carrying on the business of banking; (c) deposits with a public company which is formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes and which is eligible for deduction under clause (viii) of sub-section (1) of section 36; the aforesaid amount shall be computed with reference to the income credited or paid by a branch of the banking company or the co-operative society or the public company, as the case may be: Provided further that the amount referred to in the first proviso shall be computed with reference to the income credited or paid by the banking company or the co-operative society or the public company, as the case may be, where such banking company or the co-operative society or the public company has adopted core banking solutions: Provided also that in case of payee being a senior citizen, the provisions of sub-clause (a), sub-clause (b) and sub-clause (c) shall have effect as if for the words ‘fifty thousand rupees’, the words ‘one lakh rupees’ had been substituted;” Footnote 24, on ‘fifty’ in sub-clauses (a), (b) and (c): “Sub. for ‘forty’ by Act No. 7 of 2025, w.e.f. 1-4-2025.” Footnote 25, on ‘ten’ in sub-clause (d): “Sub. for ‘five’ by Act No. 7 of 2025, w.e.f. 1-4-2025.” Footnote 26, on ‘fifty’ in the senior-citizen proviso: “Sub. for ‘forty’ by Act No. 7 of 2025, w.e.f. 1-4-2025.” Footnote 27, on ‘one lakh’ in the senior-citizen proviso: “Sub. for ‘fifty thousand’ by Act No. 7 of 2025, w.e.f. 1-4-2025.” SUB-SECTION (3), CLAUSE (iii) — THE INSTITUTIONAL PAYEES “(iii) to such income credited or paid to— (a) any banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies, or any co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank), or (b) any financial corporation established by or under a Central, State or Provincial Act, or (c) the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956), or (d) the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), or (e) any company or co-operative society carrying on the business of insurance, or (f) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette;” SUB-SECTION (3), CLAUSE (iv) “(iv) to such income credited or paid by a firm to a partner of the firm;” SUB-SECTION (3), CLAUSES (v) AND (viia) — THE CO-OPERATIVE SOCIETY EXEMPTIONS “(v) to such income credited or paid by a co-operative society (other than a co-operative bank) to a member thereof or to such income credited or paid by a co-operative society to any other co-operative society;” “(viia) to such income credited or paid in respect of,— (a) deposits with a primary agricultural credit society or a primary credit society or a co-operative land mortgage bank or a co-operative land development bank; (b) deposits (other than time deposits made on or after the 1st day of July, 1995) with a co-operative society, other than a co-operative society or bank referred to in sub-clause (a), engaged in carrying on the business of banking;” SUB-SECTION (3), CLAUSES (ix) AND (ixa) — MOTOR ACCIDENTS CLAIMS TRIBUNAL “(ix) to such income credited by way of interest on the compensation amount awarded by the Motor Accidents Claims Tribunal;” “(ixa) to such income paid by way of interest on the compensation amount awarded by the Motor Accidents Claims Tribunal where the amount of such income or, as the case may be, the aggregate of the amounts of such income paid during the financial year does not exceed fifty thousand rupees;” SUB-SECTION (3), CLAUSES (vi), (vii), (viii), (x), (xi) “(vi) to such income credited or paid in respect of deposits under any scheme framed by the Central Government and notified by it in this behalf in the Official Gazette;” “(vii) to such income credited or paid in respect of deposits (other than time deposits made on or after the 1st day of July, 1995) with a banking company …” “(viii) to such income credited or paid by the Central Government under any provision of this Act or the Indian Income-tax Act, 1922 …” “(x) to such income which is paid or payable by an infrastructure capital company or infrastructure capital fund or infrastructure debt fund …” “(xi) to any income by way of interest referred to in clause (23FC) of section 10:” The clause letters present in sub-section (3) are (i), (ii) [omitted, printed as ‘[***]’], (iii), (iv), (v), (vi), (vii), (viia), (viii), (ix), (ixa), (x) and (xi). THE CO-OPERATIVE SOCIETY PROVISO, PRINTED AFTER CLAUSE (xi) “Provided that a co-operative society referred to in clause (v) or clause (viia) shall be liable to deduct income-tax in accordance with the provisions of sub-section (1), if— (a) the total sales, gross receipts or turnover of the co-operative society exceeds fifty crore rupees during the financial year immediately preceding the financial year in which the interest referred to in sub-section (1) is credited or paid; and (b) the amount of interest, or the aggregate of the amounts of such interest, credited or paid, or is likely to be credited or paid, during the financial year is more than one lakh rupees in case of payee being a senior citizen and fifty thousand rupees in any other case.” Footnote 28, on ‘one lakh’: “Sub. for ‘fifty thousand’ by Act No. 7 of 2025, w.e.f. 1-4-2025.” Footnote 29, on ‘fifty’: “Sub. for ‘forty’ by Act No. 7 of 2025, w.e.f. 1-4-2025.” EXPLANATIONS AT THE END OF SUB-SECTION (3) “Explanation 1.—For the purposes of clauses (i), (vii) and (viia), ‘time deposits’ means deposits (including recurring deposits) repayable on the expiry of fixed periods.” “Explanation 2.—For the purposes of this sub-section, ‘senior citizen’ means an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year.” SUB-SECTIONS (4) AND (5) “(4) The person responsible for making the payment referred to in sub-section (1) may, at the time of making any deduction, increase or reduce the amount to be deducted under this section for the purpose of adjusting any excess or deficiency arising out of any previous deduction or failure to deduct during the financial year.” “(5) The Central Government may, by notification in the Official Gazette, provide that the deduction of tax shall not be made or shall be made at such lower rate, from such payment to such person or class of persons, as may be specified in the said notification.” THE DECLARATION ROUTE Section 197A, as it stands: “(1A) Notwithstanding anything contained in section 192A or section 193 or section 194A or section 194D or section 194DA or section 194-I or section 194K, no deduction of tax shall be made under any of the said sections in the case of a person (not being a company or a firm), if such person furnishes to the person responsible for paying any income of the nature referred to in section 192A or section 193 or section 194A or section 194D or section 194DA or section 194-I or section 194K, as the case may be, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that the tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil.” “(1B) The provisions of this section shall not apply where the amount of any income of the nature referred to in sub-section (1) or sub-section (1A), as the case may be, or the aggregate of the amounts of such incomes credited or paid or likely to be credited or paid during the previous year in which such income is to be included exceeds the maximum amount which is not chargeable to income-tax.” “(1C) Notwithstanding anything contained in section 192A or section 193 or section 194 or section 194A or section 194D or section 194DA or section 194EE or section 194-I or section 194K or sub-section (1B) of this section, no deduction of tax shall be made in the case of an individual resident in India, who is of the age of sixty years or more at any time during the previous year, if such individual furnishes to the person responsible for paying any income of the nature referred to in section 192A or section 193 or section 194 or section 194A or section 194D or section 194DA or section 194EE or section 194-I or section 194K, as the case may be, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that the tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil.” Rule 29C of the Income-tax Rules, 1962, headed “Declaration by person claiming receipt of certain incomes without deduction of tax”, sub-rule (1): “A declaration under sub-section (1) or under sub-section (1A) of section 197A shall be in Form No. 15G and declaration under sub-section (1C) of section 197A shall be in Form No. 15H.” The rules and forms that go with this section are rules 28, 28AA, 28AB, 29C, 30, 31, 31A, 31AC, 31ACA and 37BA, and Form Nos. 13, 15G, 15H, 16A, 24G, 26B, 26Q, 26QA, 26QAA and 27A.
As at 23 September 2026, and for deductions made up to 31 March 2026: WHO MUST DEDUCT. Section 194A(1) fastens the duty on “any person, not being an individual or a Hindu undivided family”. The gateway for individuals and HUFs is the proviso, and it is a turnover test on the preceding financial year: total sales, gross receipts or turnover exceeding one crore rupees in business or fifty lakh rupees in profession. Those two figures are themselves an amendment. Until 31 March 2020 the proviso read “exceed the monetary limits specified under clause (a) or clause (b) of section 44AB”; Act No. 12 of 2020 substituted the fixed figures with effect from 1 April 2020. The practical effect is that the section 194A duty is now pinned to one crore and fifty lakh and no longer moves when the section 44AB audit limit moves — which it has, upwards, several times. ON WHAT. “Any income by way of interest other than income by way of interest on securities”, paid to a resident. Interest on securities is section 193. Interest paid to a non-resident is section 195, not this section. WHEN. At credit or payment, whichever is earlier. The Explanation to sub-section (1) closes the obvious escape: crediting the amount to an “Interest payable account” or a “Suspense account”, or to any other account by any other name, is deemed to be credit to the payee's account. Book entries do not postpone the duty. There is no separate “payable” test in section 194A — the section works on credit or payment, and the Explanation makes credit to an internal account count as credit. THE RATE. “At the rates in force”, which for interest under section 194A is ten per cent; the departmental TDS rates chart for assessment year 2026-27 gives “10” per cent for income by way of interest other than interest on securities. There is no separate, lower rate for a senior citizen — what a senior citizen gets is a higher threshold, not a lower rate. THE THRESHOLDS, AND WHEN EACH LAST MOVED. Section 194A(3)(i) disapplies sub-section (1) where the aggregate of the interest credited or paid, or likely to be credited or paid, in the financial year does not exceed: — fifty thousand rupees, where the payer is a banking company, a co-operative society carrying on the business of banking, or a post office deposit scheme. Substituted for “forty” by Act No. 7 of 2025 — the Finance Act, 2025 — with effect from 1 April 2025. Before that it was forty thousand rupees, substituted for “ten” by the Finance Act, 2019 with effect from 1 April 2019. — one lakh rupees, where the payee is a senior citizen, for those same three sub-clauses. The senior-citizen proviso was inserted by Act No. 13 of 2018 — the Finance Act, 2018 — with effect from 1 April 2018, and originally lifted “ten thousand” to “fifty thousand”. The Finance Act, 2019 changed “ten” to “forty” in it with effect from 1 April 2019, and the Finance Act, 2025 then changed “forty” to “fifty” and “fifty thousand” to “one lakh”, both with effect from 1 April 2025. — ten thousand rupees in any other case. Substituted for “five” by Act No. 7 of 2025 with effect from 1 April 2025. This is the limb that catches an ordinary loan: interest paid by a company or a firm to a lender who is not a bank crosses the threshold at ten thousand rupees, not fifty thousand. A senior citizen, for this purpose, is defined by Explanation 2 to sub-section (3) as a resident individual aged sixty or more at any time during the relevant previous year. Two provisos control how the threshold is counted. The first aggregates branch by branch for time deposits with a bank, a co-operative bank, or a housing-finance public company eligible for section 36(1)(viii). The second overrides it: where the payer has adopted core banking solutions, the count is across the whole institution, not branch by branch. In 2026 essentially every bank has core banking, so the branch-wise reading in the first proviso is spent in practice — a depositor with six accounts at six branches of the same bank is aggregated across all six. Explanation 1 puts recurring deposits inside “time deposits” for clauses (i), (vii) and (viia). THE CO-OPERATIVE SOCIETY EXEMPTION, AND WHAT IS LEFT OF IT. Clause (v) exempts interest credited or paid by a co-operative society, other than a co-operative bank, to a member, and interest paid by one co-operative society to another. Clause (viia) exempts interest on deposits with a primary agricultural credit society, a primary credit society, a co-operative land mortgage bank or a co-operative land development bank, and interest on non-time deposits with other banking co-operative societies. The words “other than a co-operative bank” in clause (v) are the first limitation: a co-operative bank paying its members deducts like any other bank. The second limitation is the proviso printed at the end of sub-section (3), inserted by Act No. 12 of 2020 with effect from 1 April 2020. It switches clauses (v) and (viia) off entirely for a society that meets both conditions: turnover above fifty crore rupees in the preceding financial year, and interest to the payee above one lakh rupees for a senior citizen or fifty thousand rupees for anyone else. Those two interest figures moved with everything else — they were fifty thousand and forty thousand until 31 March 2025 and were substituted by the Finance Act, 2025 with effect from 1 April 2025. The fifty crore rupee turnover figure has not moved. So a large co-operative society is now a deductor, and a small one is not. The test is the society's own turnover, not the member's status. THE OTHER MAIN EXCLUSIONS. Clause (iii) takes out interest credited or paid to a banking company or a banking co-operative society (including a co-operative land mortgage bank), to a financial corporation established by or under a Central, State or Provincial Act, to the Life Insurance Corporation of India, to the Unit Trust of India, to any company or co-operative society carrying on insurance business, and to anything the Central Government notifies for recorded reasons. Clause (iv) takes out interest paid by a firm to its partner. Clause (xi) takes out interest referred to in section 10(23FC). THE MOTOR ACCIDENTS CLAIMS TRIBUNAL LIMBS. There are two of them and they work differently. Clause (ix) exempts interest “credited” on compensation awarded by a Motor Accidents Claims Tribunal, with no monetary limit at all. Clause (ixa) exempts interest “paid” on such compensation only where the amount, or the aggregate of the amounts, paid during the financial year does not exceed fifty thousand rupees. The split matters because interest on a tribunal award usually accrues for years and is credited long before it is paid: nothing is deducted while it sits, and the whole accumulated payment is tested against fifty thousand rupees in the year it is released. That fifty thousand rupee figure is the one threshold in section 194A that the Finance Act, 2025 did not touch, and it has stood unchanged since 2017. THE PAYER'S ADJUSTMENT. Section 194A(4) lets the person making the payment increase or reduce the amount deducted at any deduction “for the purpose of adjusting any excess or deficiency arising out of any previous deduction or failure to deduct during the financial year”. The permission is confined to the financial year; it is not a licence to fix last year's short deduction in this year's. THE DECLARATION ROUTE. Section 197A(1A) lets a person who is not a company or a firm stop a section 194A deduction by furnishing the payer a declaration, in duplicate, that the tax on his estimated total income for the year will be nil. Rule 29C(1) prescribes Form No. 15G for that. Section 197A(1B) then caps it: the section does not apply at all where the income in question, or the aggregate of such incomes, exceeds the maximum amount not chargeable to income-tax. Section 197A(1C) is the senior citizen's own route — a resident individual aged sixty or more — and it opens “Notwithstanding … sub-section (1B) of this section”, so the cap in (1B) does not bind him. Rule 29C(1) prescribes Form No. 15H for that declaration. The cap is not the only difference between the two forms, and the other one is easy to miss. The lists of covered sections are not the same. Section 197A(1A) runs on sections 192A, 193, 194A, 194D, 194DA, 194-I and 194K. Section 197A(1C) runs on all of those and, in addition, on section 194 and section 194EE. So Form No. 15H reaches dividends under section 194 and payments out of National Savings Scheme deposits under section 194EE, which the section 197A(1A) limb of Form No. 15G does not. Form No. 15G is not confined to sub-section (1A) either: rule 29C(1) gives it to a declaration “under sub-section (1) or under sub-section (1A)”, and section 197A(1) is the section 194 and section 194EE route open to any resident individual. For section 194A, which is the provision this record is about, both routes lead to the same place — a non-company, non-firm payee uses Form No. 15G subject to the (1B) cap, and a resident individual of sixty or more uses Form No. 15H free of it. Section 206AA(2) makes any such declaration invalid unless it carries the declarant's PAN, and section 206AA(3) then sends the deductor back to the section 206AA(1) rate. THE OTHER ROUTE. Section 194A is one of the sections named in section 197(1), so a payee who wants a lower rate rather than nil, or who cannot say his tax will be nil, applies to the Assessing Officer in Form No. 13 under rule 28 instead. WHAT CHANGED, AND WHEN, IN SHORT: — 1 June 1992: sub-section (2) omitted by the Finance Act, 1992. — 1 April 2018: senior-citizen proviso inserted in clause (i) by Act No. 13 of 2018, at fifty thousand rupees against a then base of ten thousand. — 1 April 2019: “ten” substituted by “forty” in sub-clauses (a), (b) and (c) and in the senior-citizen proviso by the Finance Act, 2019. — 1 April 2020: the section 44AB cross-reference in the sub-section (1) proviso replaced by fixed figures of one crore and fifty lakh rupees, and the co-operative society proviso inserted, both by Act No. 12 of 2020. — 1 April 2021: clause (x) amended by Act No. 13 of 2021. — 1 April 2025: all six threshold figures substituted by Act No. 7 of 2025 — fifty for forty, ten for five, fifty for forty and one lakh for fifty thousand in the senior-citizen proviso, and one lakh for fifty thousand and fifty for forty in the co-operative society proviso. — The Finance Bill, 2026 (Bill No. 3 of 2026) contains no clause amending section 194A, and no 2026 Act has amended it. — 1 April 2026: the Income-tax Act, 1961 was repealed by section 536(1) of the Income-tax Act, 2025 (Act No. 30 of 2025). The successor is section 393(1) of the 2025 Act. In section 393(6) of the 2025 Act the Table at serial number 5(ii) sets the threshold for a banking company, a co-operative society carrying on banking business or a post office at “₹ 1,00,000 in the case of a senior citizen; ₹ 50,000 in case of person other than senior citizen” at rates in force, and serial number 5(iii) sets ₹ 10,000 for a specified person other than those. That Table was itself amended by Act No. 4 of 2026 with effect from 1 April 2026, but the three interest figures came through unchanged from the 1961 Act. The declaration route carries over into section 393(6), which is to be renumbered as section 393(6)(a) by Act No. 4 of 2026 with effect from 1 April 2027, so quote the sub-section number with that date in mind.
Not applicable — this is a statement of the statutory text as printed on the departmental section pages, with the amendment history taken from the footnote apparatus on those pages. No judicial reasoning is involved.
fifty thousand rupees, where the payer is a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution, referred to in section 51 of that Act)
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Handle my notice → Ask a CA on WhatsAppSection 194A requires any person who is not an individual or a Hindu undivided family, and who pays a resident interest other than interest on securities, to deduct tax at the rates in force at the time of credit or payment, whichever is earlier. An individual or HUF is drawn in only by the proviso to sub-section (1), and only if total sales, gross receipts or turnover exceeded one crore rupees in business or fifty lakh rupees in profession in the preceding financial year. Section 194A(3)(i) sets the thresholds. From 1 April 2025 they are fifty thousand rupees where the payer is a banking company, a co-operative society carrying on banking business or a post office deposit scheme, one lakh rupees where the payee is a senior citizen, and ten thousand rupees in any other case — each figure substituted by Act No. 7 of 2025, the Finance Act, 2025. Section 194A(3) also carries the exclusions: interest paid to a banking company, a financial corporation, the Life Insurance Corporation, the Unit Trust of India or an insurer under clause (iii); interest paid by a firm to its partner under clause (iv); the co-operative society exemptions in clauses (v) and (viia), which since 1 April 2020 are switched off only where both conditions in the proviso are met — the society's turnover exceeded fifty crore rupees in the preceding financial year and the interest to that payee crossed one lakh rupees for a senior citizen or fifty thousand rupees for anyone else; and the two Motor Accidents Claims Tribunal limbs in clauses (ix) and (ixa), where interest credited is never liable and interest paid is liable only above fifty thousand rupees in the financial year — a figure the Finance Act, 2025 did not move. Section 197A(1A) and (1C) let a payee stop the deduction by declaration — Form No. 15G, or Form No. 15H for a resident individual aged sixty or more, both prescribed by rule 29C. From 1 April 2026 the Income-tax Act, 1961 was repealed by section 536 of the Income-tax Act, 2025; the successor is section 393(1) of the 2025 Act, whose Table carries the same three figures. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 194A, section 194A(1), section 194A(3)(i), section 194A(3)(v), section 194A(3)(viia), section 194A(3)(ix), section 194A(3)(ixa), section 197A, section Rule 29C, section 206AA, section 197, section 44AB, section 36(1)(viii), section 10(23FC), section 193, section 201(1), section 201(1A) of the Income Tax Act 1961. It is reported as Section 194A of the Income-tax Act, 1961, as amended up to 2026. The thresholds moved on 1 April 2025 and almost every number in the section moved at once. A bank customer who was over the limit in 2024-25 at forty thousand rupees may be under it in 2025-26 at fifty thousand; a senior citizen's limit doubled from fifty thousand to one lakh; and the ordinary limb — the one that catches interest on a private loan, on money owed to a supplier — went from five thousand to ten thousand. Run a 2024-25 check on 2025-26 figures, or the reverse, and you get the answer wrong in both directions. The same Finance Act did not touch the fifty thousand rupee figure for interest paid on a Motor Accidents Claims Tribunal award, so that one is unchanged and easy to get wrong by assuming it followed the others. For a co-operative society the question is no longer whether the payee is a member. Since 1 April 2020 a society whose turnover crossed fifty crore rupees in the preceding year deducts on interest to a member like any other payer, once the interest to that payee crosses one lakh rupees for a senior citizen or fifty thousand rupees for anyone else — both conditions have to be met, not either. A society that has grown past fifty crore rupees and is still relying on clause (v) is in default under section 201(1) and running interest under section 201(1A). And from 1 April 2026 all of this is being read out of a repealed Act: the live provision is section 393(1) of the Income-tax Act, 2025, which carries the same three figures in a Table. If it applies to you, the first step is this: Fix which financial year you are testing before you look at any figure. Fifty thousand, one lakh and ten thousand are the figures from 1 April 2025. For 2019-20 to 2024-25 the figures are forty thousand, fifty thousand and five thousand. Before 1 April 2019 the bank, co-operative and post-office limb was ten thousand rupees, and before 1 April 2018 there was no senior-citizen limb at all.
The operative statutory text of section 194A of the Income-tax Act, 1961, as it stands after the amendments made with effect from 1 April 2025. MARGINAL NOTE: “Interest other than ‘Interest on securities’”. SUB-SECTION (1) “194A. (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income by way of interest on securities, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force: Provided that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed one crore rupees in case of business or fifty lakh rupees in case of profession during the financial year immediately preceding the financial year in which such interest is credited or paid, shall be liable to deduct income-tax under this section. Explanation.—For the purposes of this section, where any income by way of interest as aforesaid is credited to any account, whether called ‘Interest payable account’ or ‘Suspense account’ or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.” SUB-SECTION (2) Printed as omitted: “[Omitted by the Finance Act, 1992, w.e.f. 1-6-1992.]” SUB-SECTION (3), CLAUSE (i) — THE THRESHOLDS “(3) The provisions of sub-section (1) shall not apply— (i) where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the person referred to in sub-section (1) to the account of, or to, the payee, does not exceed— (a) fifty thousand rupees, where the payer is a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution, referred to in section 51 of that Act); (b) fifty thousand rupees, where the payer is a co-operative society engaged in carrying on the business of banking; (c) fifty thousand rupees, on any deposit with post office under any scheme framed by the Central Government and notified by it in this behalf; and (d) ten thousand rupees in any other case: Provided that in respect of the income credited or paid in respect of— (a) time deposits with a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); or (b) time deposits with a co-operative society engaged in carrying on the business of banking; (c) deposits with a public company which is formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes and which is eligible for deduction under clause (viii) of sub-section (1) of section 36; the aforesaid amount shall be computed with reference to the income credited or paid by a branch of the banking company or the co-operative society or the public company, as the case may be: Provided further that the amount referred to in the first proviso shall be computed with reference to the income credited or paid by the banking company or the co-operative society or the public company, as the case may be, where such banking company or the co-operative society or the public company has adopted core banking solutions: Provided also that in case of payee being a senior citizen, the provisions of sub-clause (a), sub-clause (b) and sub-clause (c) shall have effect as if for the words ‘fifty thousand rupees’, the words ‘one lakh rupees’ had been substituted;” Footnote 24, on ‘fifty’ in sub-clauses (a), (b) and (c): “Sub. for ‘forty’ by Act No. 7 of 2025, w.e.f. 1-4-2025.” Footnote 25, on ‘ten’ in sub-clause (d): “Sub. for ‘five’ by Act No. 7 of 2025, w.e.f. 1-4-2025.” Footnote 26, on ‘fifty’ in the senior-citizen proviso: “Sub. for ‘forty’ by Act No. 7 of 2025, w.e.f. 1-4-2025.” Footnote 27, on ‘one lakh’ in the senior-citizen proviso: “Sub. for ‘fifty thousand’ by Act No. 7 of 2025, w.e.f. 1-4-2025.” SUB-SECTION (3), CLAUSE (iii) — THE INSTITUTIONAL PAYEES “(iii) to such income credited or paid to— (a) any banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies, or any co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank), or (b) any financial corporation established by or under a Central, State or Provincial Act, or (c) the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956), or (d) the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), or (e) any company or co-operative society carrying on the business of insurance, or (f) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette;” SUB-SECTION (3), CLAUSE (iv) “(iv) to such income credited or paid by a firm to a partner of the firm;” SUB-SECTION (3), CLAUSES (v) AND (viia) — THE CO-OPERATIVE SOCIETY EXEMPTIONS “(v) to such income credited or paid by a co-operative society (other than a co-operative bank) to a member thereof or to such income credited or paid by a co-operative society to any other co-operative society;” “(viia) to such income credited or paid in respect of,— (a) deposits with a primary agricultural credit society or a primary credit society or a co-operative land mortgage bank or a co-operative land development bank; (b) deposits (other than time deposits made on or after the 1st day of July, 1995) with a co-operative society, other than a co-operative society or bank referred to in sub-clause (a), engaged in carrying on the business of banking;” SUB-SECTION (3), CLAUSES (ix) AND (ixa) — MOTOR ACCIDENTS CLAIMS TRIBUNAL “(ix) to such income credited by way of interest on the compensation amount awarded by the Motor Accidents Claims Tribunal;” “(ixa) to such income paid by way of interest on the compensation amount awarded by the Motor Accidents Claims Tribunal where the amount of such income or, as the case may be, the aggregate of the amounts of such income paid during the financial year does not exceed fifty thousand rupees;” SUB-SECTION (3), CLAUSES (vi), (vii), (viii), (x), (xi) “(vi) to such income credited or paid in respect of deposits under any scheme framed by the Central Government and notified by it in this behalf in the Official Gazette;” “(vii) to such income credited or paid in respect of deposits (other than time deposits made on or after the 1st day of July, 1995) with a banking company …” “(viii) to such income credited or paid by the Central Government under any provision of this Act or the Indian Income-tax Act, 1922 …” “(x) to such income which is paid or payable by an infrastructure capital company or infrastructure capital fund or infrastructure debt fund …” “(xi) to any income by way of interest referred to in clause (23FC) of section 10:” The clause letters present in sub-section (3) are (i), (ii) [omitted, printed as ‘[***]’], (iii), (iv), (v), (vi), (vii), (viia), (viii), (ix), (ixa), (x) and (xi). THE CO-OPERATIVE SOCIETY PROVISO, PRINTED AFTER CLAUSE (xi) “Provided that a co-operative society referred to in clause (v) or clause (viia) shall be liable to deduct income-tax in accordance with the provisions of sub-section (1), if— (a) the total sales, gross receipts or turnover of the co-operative society exceeds fifty crore rupees during the financial year immediately preceding the financial year in which the interest referred to in sub-section (1) is credited or paid; and (b) the amount of interest, or the aggregate of the amounts of such interest, credited or paid, or is likely to be credited or paid, during the financial year is more than one lakh rupees in case of payee being a senior citizen and fifty thousand rupees in any other case.” Footnote 28, on ‘one lakh’: “Sub. for ‘fifty thousand’ by Act No. 7 of 2025, w.e.f. 1-4-2025.” Footnote 29, on ‘fifty’: “Sub. for ‘forty’ by Act No. 7 of 2025, w.e.f. 1-4-2025.” EXPLANATIONS AT THE END OF SUB-SECTION (3) “Explanation 1.—For the purposes of clauses (i), (vii) and (viia), ‘time deposits’ means deposits (including recurring deposits) repayable on the expiry of fixed periods.” “Explanation 2.—For the purposes of this sub-section, ‘senior citizen’ means an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year.” SUB-SECTIONS (4) AND (5) “(4) The person responsible for making the payment referred to in sub-section (1) may, at the time of making any deduction, increase or reduce the amount to be deducted under this section for the purpose of adjusting any excess or deficiency arising out of any previous deduction or failure to deduct during the financial year.” “(5) The Central Government may, by notification in the Official Gazette, provide that the deduction of tax shall not be made or shall be made at such lower rate, from such payment to such person or class of persons, as may be specified in the said notification.” THE DECLARATION ROUTE Section 197A, as it stands: “(1A) Notwithstanding anything contained in section 192A or section 193 or section 194A or section 194D or section 194DA or section 194-I or section 194K, no deduction of tax shall be made under any of the said sections in the case of a person (not being a company or a firm), if such person furnishes to the person responsible for paying any income of the nature referred to in section 192A or section 193 or section 194A or section 194D or section 194DA or section 194-I or section 194K, as the case may be, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that the tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil.” “(1B) The provisions of this section shall not apply where the amount of any income of the nature referred to in sub-section (1) or sub-section (1A), as the case may be, or the aggregate of the amounts of such incomes credited or paid or likely to be credited or paid during the previous year in which such income is to be included exceeds the maximum amount which is not chargeable to income-tax.” “(1C) Notwithstanding anything contained in section 192A or section 193 or section 194 or section 194A or section 194D or section 194DA or section 194EE or section 194-I or section 194K or sub-section (1B) of this section, no deduction of tax shall be made in the case of an individual resident in India, who is of the age of sixty years or more at any time during the previous year, if such individual furnishes to the person responsible for paying any income of the nature referred to in section 192A or section 193 or section 194 or section 194A or section 194D or section 194DA or section 194EE or section 194-I or section 194K, as the case may be, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that the tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil.” Rule 29C of the Income-tax Rules, 1962, headed “Declaration by person claiming receipt of certain incomes without deduction of tax”, sub-rule (1): “A declaration under sub-section (1) or under sub-section (1A) of section 197A shall be in Form No. 15G and declaration under sub-section (1C) of section 197A shall be in Form No. 15H.” The rules and forms that go with this section are rules 28, 28AA, 28AB, 29C, 30, 31, 31A, 31AC, 31ACA and 37BA, and Form Nos. 13, 15G, 15H, 16A, 24G, 26B, 26Q, 26QA, 26QAA and 27A. The matter was decided on 2025-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. As at 23 September 2026, and for deductions made up to 31 March 2026: WHO MUST DEDUCT. Section 194A(1) fastens the duty on “any person, not being an individual or a Hindu undivided family”. The gateway for individuals and HUFs is the proviso, and it is a turnover test on the preceding financial year: total sales, gross receipts or turnover exceeding one crore rupees in business or fifty lakh rupees in profession. Those two figures are themselves an amendment. Until 31 March 2020 the proviso read “exceed the monetary limits specified under clause (a) or clause (b) of section 44AB”; Act No. 12 of 2020 substituted the fixed figures with effect from 1 April 2020. The practical effect is that the section 194A duty is now pinned to one crore and fifty lakh and no longer moves when the section 44AB audit limit moves — which it has, upwards, several times. ON WHAT. “Any income by way of interest other than income by way of interest on securities”, paid to a resident. Interest on securities is section 193. Interest paid to a non-resident is section 195, not this section. WHEN. At credit or payment, whichever is earlier. The Explanation to sub-section (1) closes the obvious escape: crediting the amount to an “Interest payable account” or a “Suspense account”, or to any other account by any other name, is deemed to be credit to the payee's account. Book entries do not postpone the duty. There is no separate “payable” test in section 194A — the section works on credit or payment, and the Explanation makes credit to an internal account count as credit. THE RATE. “At the rates in force”, which for interest under section 194A is ten per cent; the departmental TDS rates chart for assessment year 2026-27 gives “10” per cent for income by way of interest other than interest on securities. There is no separate, lower rate for a senior citizen — what a senior citizen gets is a higher threshold, not a lower rate. THE THRESHOLDS, AND WHEN EACH LAST MOVED. Section 194A(3)(i) disapplies sub-section (1) where the aggregate of the interest credited or paid, or likely to be credited or paid, in the financial year does not exceed: — fifty thousand rupees, where the payer is a banking company, a co-operative society carrying on the business of banking, or a post office deposit scheme. Substituted for “forty” by Act No. 7 of 2025 — the Finance Act, 2025 — with effect from 1 April 2025. Before that it was forty thousand rupees, substituted for “ten” by the Finance Act, 2019 with effect from 1 April 2019. — one lakh rupees, where the payee is a senior citizen, for those same three sub-clauses. The senior-citizen proviso was inserted by Act No. 13 of 2018 — the Finance Act, 2018 — with effect from 1 April 2018, and originally lifted “ten thousand” to “fifty thousand”. The Finance Act, 2019 changed “ten” to “forty” in it with effect from 1 April 2019, and the Finance Act, 2025 then changed “forty” to “fifty” and “fifty thousand” to “one lakh”, both with effect from 1 April 2025. — ten thousand rupees in any other case. Substituted for “five” by Act No. 7 of 2025 with effect from 1 April 2025. This is the limb that catches an ordinary loan: interest paid by a company or a firm to a lender who is not a bank crosses the threshold at ten thousand rupees, not fifty thousand. A senior citizen, for this purpose, is defined by Explanation 2 to sub-section (3) as a resident individual aged sixty or more at any time during the relevant previous year. Two provisos control how the threshold is counted. The first aggregates branch by branch for time deposits with a bank, a co-operative bank, or a housing-finance public company eligible for section 36(1)(viii). The second overrides it: where the payer has adopted core banking solutions, the count is across the whole institution, not branch by branch. In 2026 essentially every bank has core banking, so the branch-wise reading in the first proviso is spent in practice — a depositor with six accounts at six branches of the same bank is aggregated across all six. Explanation 1 puts recurring deposits inside “time deposits” for clauses (i), (vii) and (viia). THE CO-OPERATIVE SOCIETY EXEMPTION, AND WHAT IS LEFT OF IT. Clause (v) exempts interest credited or paid by a co-operative society, other than a co-operative bank, to a member, and interest paid by one co-operative society to another. Clause (viia) exempts interest on deposits with a primary agricultural credit society, a primary credit society, a co-operative land mortgage bank or a co-operative land development bank, and interest on non-time deposits with other banking co-operative societies. The words “other than a co-operative bank” in clause (v) are the first limitation: a co-operative bank paying its members deducts like any other bank. The second limitation is the proviso printed at the end of sub-section (3), inserted by Act No. 12 of 2020 with effect from 1 April 2020. It switches clauses (v) and (viia) off entirely for a society that meets both conditions: turnover above fifty crore rupees in the preceding financial year, and interest to the payee above one lakh rupees for a senior citizen or fifty thousand rupees for anyone else. Those two interest figures moved with everything else — they were fifty thousand and forty thousand until 31 March 2025 and were substituted by the Finance Act, 2025 with effect from 1 April 2025. The fifty crore rupee turnover figure has not moved. So a large co-operative society is now a deductor, and a small one is not. The test is the society's own turnover, not the member's status. THE OTHER MAIN EXCLUSIONS. Clause (iii) takes out interest credited or paid to a banking company or a banking co-operative society (including a co-operative land mortgage bank), to a financial corporation established by or under a Central, State or Provincial Act, to the Life Insurance Corporation of India, to the Unit Trust of India, to any company or co-operative society carrying on insurance business, and to anything the Central Government notifies for recorded reasons. Clause (iv) takes out interest paid by a firm to its partner. Clause (xi) takes out interest referred to in section 10(23FC). THE MOTOR ACCIDENTS CLAIMS TRIBUNAL LIMBS. There are two of them and they work differently. Clause (ix) exempts interest “credited” on compensation awarded by a Motor Accidents Claims Tribunal, with no monetary limit at all. Clause (ixa) exempts interest “paid” on such compensation only where the amount, or the aggregate of the amounts, paid during the financial year does not exceed fifty thousand rupees. The split matters because interest on a tribunal award usually accrues for years and is credited long before it is paid: nothing is deducted while it sits, and the whole accumulated payment is tested against fifty thousand rupees in the year it is released. That fifty thousand rupee figure is the one threshold in section 194A that the Finance Act, 2025 did not touch, and it has stood unchanged since 2017. THE PAYER'S ADJUSTMENT. Section 194A(4) lets the person making the payment increase or reduce the amount deducted at any deduction “for the purpose of adjusting any excess or deficiency arising out of any previous deduction or failure to deduct during the financial year”. The permission is confined to the financial year; it is not a licence to fix last year's short deduction in this year's. THE DECLARATION ROUTE. Section 197A(1A) lets a person who is not a company or a firm stop a section 194A deduction by furnishing the payer a declaration, in duplicate, that the tax on his estimated total income for the year will be nil. Rule 29C(1) prescribes Form No. 15G for that. Section 197A(1B) then caps it: the section does not apply at all where the income in question, or the aggregate of such incomes, exceeds the maximum amount not chargeable to income-tax. Section 197A(1C) is the senior citizen's own route — a resident individual aged sixty or more — and it opens “Notwithstanding … sub-section (1B) of this section”, so the cap in (1B) does not bind him. Rule 29C(1) prescribes Form No. 15H for that declaration. The cap is not the only difference between the two forms, and the other one is easy to miss. The lists of covered sections are not the same. Section 197A(1A) runs on sections 192A, 193, 194A, 194D, 194DA, 194-I and 194K. Section 197A(1C) runs on all of those and, in addition, on section 194 and section 194EE. So Form No. 15H reaches dividends under section 194 and payments out of National Savings Scheme deposits under section 194EE, which the section 197A(1A) limb of Form No. 15G does not. Form No. 15G is not confined to sub-section (1A) either: rule 29C(1) gives it to a declaration “under sub-section (1) or under sub-section (1A)”, and section 197A(1) is the section 194 and section 194EE route open to any resident individual. For section 194A, which is the provision this record is about, both routes lead to the same place — a non-company, non-firm payee uses Form No. 15G subject to the (1B) cap, and a resident individual of sixty or more uses Form No. 15H free of it. Section 206AA(2) makes any such declaration invalid unless it carries the declarant's PAN, and section 206AA(3) then sends the deductor back to the section 206AA(1) rate. THE OTHER ROUTE. Section 194A is one of the sections named in section 197(1), so a payee who wants a lower rate rather than nil, or who cannot say his tax will be nil, applies to the Assessing Officer in Form No. 13 under rule 28 instead. WHAT CHANGED, AND WHEN, IN SHORT: — 1 June 1992: sub-section (2) omitted by the Finance Act, 1992. — 1 April 2018: senior-citizen proviso inserted in clause (i) by Act No. 13 of 2018, at fifty thousand rupees against a then base of ten thousand. — 1 April 2019: “ten” substituted by “forty” in sub-clauses (a), (b) and (c) and in the senior-citizen proviso by the Finance Act, 2019. — 1 April 2020: the section 44AB cross-reference in the sub-section (1) proviso replaced by fixed figures of one crore and fifty lakh rupees, and the co-operative society proviso inserted, both by Act No. 12 of 2020. — 1 April 2021: clause (x) amended by Act No. 13 of 2021. — 1 April 2025: all six threshold figures substituted by Act No. 7 of 2025 — fifty for forty, ten for five, fifty for forty and one lakh for fifty thousand in the senior-citizen proviso, and one lakh for fifty thousand and fifty for forty in the co-operative society proviso. — The Finance Bill, 2026 (Bill No. 3 of 2026) contains no clause amending section 194A, and no 2026 Act has amended it. — 1 April 2026: the Income-tax Act, 1961 was repealed by section 536(1) of the Income-tax Act, 2025 (Act No. 30 of 2025). The successor is section 393(1) of the 2025 Act. In section 393(6) of the 2025 Act the Table at serial number 5(ii) sets the threshold for a banking company, a co-operative society carrying on banking business or a post office at “₹ 1,00,000 in the case of a senior citizen; ₹ 50,000 in case of person other than senior citizen” at rates in force, and serial number 5(iii) sets ₹ 10,000 for a specified person other than those. That Table was itself amended by Act No. 4 of 2026 with effect from 1 April 2026, but the three interest figures came through unchanged from the 1961 Act. The declaration route carries over into section 393(6), which is to be renumbered as section 393(6)(a) by Act No. 4 of 2026 with effect from 1 April 2027, so quote the sub-section number with that date in mind.
Not applicable — this is a statement of the statutory text as printed on the departmental section pages, with the amendment history taken from the footnote apparatus on those pages. No judicial reasoning is involved. In the words reproduced by the source cited on this page: "fifty thousand rupees, where the payer is a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution, referred to in section 51 of that Act)"
It was decided by the CBDT Circulars & Instructions on 2025-04-01 and is reported as Section 194A of the Income-tax Act, 1961, as amended up to 2026. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 194A, section 194A(1), section 194A(3)(i), section 194A(3)(v), section 194A(3)(viia), section 194A(3)(ix), section 194A(3)(ixa), section 197A, section Rule 29C, section 206AA, section 197, section 44AB, section 36(1)(viii), section 10(23FC), section 193, section 201(1), section 201(1A), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. As at 23 September 2026, and for deductions made up to 31 March 2026: WHO MUST DEDUCT. Section 194A(1) fastens the duty on “any person, not being an individual or a Hindu undivided family”. The gateway for individuals and HUFs is the proviso, and it is a turnover test on the preceding financial year: total sales, gross receipts or turnover exceeding one crore rupees in business or fifty lakh rupees in profession. Those two figures are themselves an amendment. Until 31 March 2020 the proviso read “exceed the monetary limits specified under clause (a) or clause (b) of section 44AB”; Act No. 12 of 2020 substituted the fixed figures with effect from 1 April 2020. The practical effect is that the section 194A duty is now pinned to one crore and fifty lakh and no longer moves when the section 44AB audit limit moves — which it has, upwards, several times. ON WHAT. “Any income by way of interest other than income by way of interest on securities”, paid to a resident. Interest on securities is section 193. Interest paid to a non-resident is section 195, not this section. WHEN. At credit or payment, whichever is earlier. The Explanation to sub-section (1) closes the obvious escape: crediting the amount to an “Interest payable account” or a “Suspense account”, or to any other account by any other name, is deemed to be credit to the payee's account. Book entries do not postpone the duty. There is no separate “payable” test in section 194A — the section works on credit or payment, and the Explanation makes credit to an internal account count as credit. THE RATE. “At the rates in force”, which for interest under section 194A is ten per cent; the departmental TDS rates chart for assessment year 2026-27 gives “10” per cent for income by way of interest other than interest on securities. There is no separate, lower rate for a senior citizen — what a senior citizen gets is a higher threshold, not a lower rate. THE THRESHOLDS, AND WHEN EACH LAST MOVED. Section 194A(3)(i) disapplies sub-section (1) where the aggregate of the interest credited or paid, or likely to be credited or paid, in the financial year does not exceed: — fifty thousand rupees, where the payer is a banking company, a co-operative society carrying on the business of banking, or a post office deposit scheme. Substituted for “forty” by Act No. 7 of 2025 — the Finance Act, 2025 — with effect from 1 April 2025. Before that it was forty thousand rupees, substituted for “ten” by the Finance Act, 2019 with effect from 1 April 2019. — one lakh rupees, where the payee is a senior citizen, for those same three sub-clauses. The senior-citizen proviso was inserted by Act No. 13 of 2018 — the Finance Act, 2018 — with effect from 1 April 2018, and originally lifted “ten thousand” to “fifty thousand”. The Finance Act, 2019 changed “ten” to “forty” in it with effect from 1 April 2019, and the Finance Act, 2025 then changed “forty” to “fifty” and “fifty thousand” to “one lakh”, both with effect from 1 April 2025. — ten thousand rupees in any other case. Substituted for “five” by Act No. 7 of 2025 with effect from 1 April 2025. This is the limb that catches an ordinary loan: interest paid by a company or a firm to a lender who is not a bank crosses the threshold at ten thousand rupees, not fifty thousand. A senior citizen, for this purpose, is defined by Explanation 2 to sub-section (3) as a resident individual aged sixty or more at any time during the relevant previous year. Two provisos control how the threshold is counted. The first aggregates branch by branch for time deposits with a bank, a co-operative bank, or a housing-finance public company eligible for section 36(1)(viii). The second overrides it: where the payer has adopted core banking solutions, the count is across the whole institution, not branch by branch. In 2026 essentially every bank has core banking, so the branch-wise reading in the first proviso is spent in practice — a depositor with six accounts at six branches of the same bank is aggregated across all six. Explanation 1 puts recurring deposits inside “time deposits” for clauses (i), (vii) and (viia). THE CO-OPERATIVE SOCIETY EXEMPTION, AND WHAT IS LEFT OF IT. Clause (v) exempts interest credited or paid by a co-operative society, other than a co-operative bank, to a member, and interest paid by one co-operative society to another. Clause (viia) exempts interest on deposits with a primary agricultural credit society, a primary credit society, a co-operative land mortgage bank or a co-operative land development bank, and interest on non-time deposits with other banking co-operative societies. The words “other than a co-operative bank” in clause (v) are the first limitation: a co-operative bank paying its members deducts like any other bank. The second limitation is the proviso printed at the end of sub-section (3), inserted by Act No. 12 of 2020 with effect from 1 April 2020. It switches clauses (v) and (viia) off entirely for a society that meets both conditions: turnover above fifty crore rupees in the preceding financial year, and interest to the payee above one lakh rupees for a senior citizen or fifty thousand rupees for anyone else. Those two interest figures moved with everything else — they were fifty thousand and forty thousand until 31 March 2025 and were substituted by the Finance Act, 2025 with effect from 1 April 2025. The fifty crore rupee turnover figure has not moved. So a large co-operative society is now a deductor, and a small one is not. The test is the society's own turnover, not the member's status. THE OTHER MAIN EXCLUSIONS. Clause (iii) takes out interest credited or paid to a banking company or a banking co-operative society (including a co-operative land mortgage bank), to a financial corporation established by or under a Central, State or Provincial Act, to the Life Insurance Corporation of India, to the Unit Trust of India, to any company or co-operative society carrying on insurance business, and to anything the Central Government notifies for recorded reasons. Clause (iv) takes out interest paid by a firm to its partner. Clause (xi) takes out interest referred to in section 10(23FC). THE MOTOR ACCIDENTS CLAIMS TRIBUNAL LIMBS. There are two of them and they work differently. Clause (ix) exempts interest “credited” on compensation awarded by a Motor Accidents Claims Tribunal, with no monetary limit at all. Clause (ixa) exempts interest “paid” on such compensation only where the amount, or the aggregate of the amounts, paid during the financial year does not exceed fifty thousand rupees. The split matters because interest on a tribunal award usually accrues for years and is credited long before it is paid: nothing is deducted while it sits, and the whole accumulated payment is tested against fifty thousand rupees in the year it is released. That fifty thousand rupee figure is the one threshold in section 194A that the Finance Act, 2025 did not touch, and it has stood unchanged since 2017. THE PAYER'S ADJUSTMENT. Section 194A(4) lets the person making the payment increase or reduce the amount deducted at any deduction “for the purpose of adjusting any excess or deficiency arising out of any previous deduction or failure to deduct during the financial year”. The permission is confined to the financial year; it is not a licence to fix last year's short deduction in this year's. THE DECLARATION ROUTE. Section 197A(1A) lets a person who is not a company or a firm stop a section 194A deduction by furnishing the payer a declaration, in duplicate, that the tax on his estimated total income for the year will be nil. Rule 29C(1) prescribes Form No. 15G for that. Section 197A(1B) then caps it: the section does not apply at all where the income in question, or the aggregate of such incomes, exceeds the maximum amount not chargeable to income-tax. Section 197A(1C) is the senior citizen's own route — a resident individual aged sixty or more — and it opens “Notwithstanding … sub-section (1B) of this section”, so the cap in (1B) does not bind him. Rule 29C(1) prescribes Form No. 15H for that declaration. The cap is not the only difference between the two forms, and the other one is easy to miss. The lists of covered sections are not the same. Section 197A(1A) runs on sections 192A, 193, 194A, 194D, 194DA, 194-I and 194K. Section 197A(1C) runs on all of those and, in addition, on section 194 and section 194EE. So Form No. 15H reaches dividends under section 194 and payments out of National Savings Scheme deposits under section 194EE, which the section 197A(1A) limb of Form No. 15G does not. Form No. 15G is not confined to sub-section (1A) either: rule 29C(1) gives it to a declaration “under sub-section (1) or under sub-section (1A)”, and section 197A(1) is the section 194 and section 194EE route open to any resident individual. For section 194A, which is the provision this record is about, both routes lead to the same place — a non-company, non-firm payee uses Form No. 15G subject to the (1B) cap, and a resident individual of sixty or more uses Form No. 15H free of it. Section 206AA(2) makes any such declaration invalid unless it carries the declarant's PAN, and section 206AA(3) then sends the deductor back to the section 206AA(1) rate. THE OTHER ROUTE. Section 194A is one of the sections named in section 197(1), so a payee who wants a lower rate rather than nil, or who cannot say his tax will be nil, applies to the Assessing Officer in Form No. 13 under rule 28 instead. WHAT CHANGED, AND WHEN, IN SHORT: — 1 June 1992: sub-section (2) omitted by the Finance Act, 1992. — 1 April 2018: senior-citizen proviso inserted in clause (i) by Act No. 13 of 2018, at fifty thousand rupees against a then base of ten thousand. — 1 April 2019: “ten” substituted by “forty” in sub-clauses (a), (b) and (c) and in the senior-citizen proviso by the Finance Act, 2019. — 1 April 2020: the section 44AB cross-reference in the sub-section (1) proviso replaced by fixed figures of one crore and fifty lakh rupees, and the co-operative society proviso inserted, both by Act No. 12 of 2020. — 1 April 2021: clause (x) amended by Act No. 13 of 2021. — 1 April 2025: all six threshold figures substituted by Act No. 7 of 2025 — fifty for forty, ten for five, fifty for forty and one lakh for fifty thousand in the senior-citizen proviso, and one lakh for fifty thousand and fifty for forty in the co-operative society proviso. — The Finance Bill, 2026 (Bill No. 3 of 2026) contains no clause amending section 194A, and no 2026 Act has amended it. — 1 April 2026: the Income-tax Act, 1961 was repealed by section 536(1) of the Income-tax Act, 2025 (Act No. 30 of 2025). The successor is section 393(1) of the 2025 Act. In section 393(6) of the 2025 Act the Table at serial number 5(ii) sets the threshold for a banking company, a co-operative society carrying on banking business or a post office at “₹ 1,00,000 in the case of a senior citizen; ₹ 50,000 in case of person other than senior citizen” at rates in force, and serial number 5(iii) sets ₹ 10,000 for a specified person other than those. That Table was itself amended by Act No. 4 of 2026 with effect from 1 April 2026, but the three interest figures came through unchanged from the 1961 Act. The declaration route carries over into section 393(6), which is to be renumbered as section 393(6)(a) by Act No. 4 of 2026 with effect from 1 April 2027, so quote the sub-section number with that date in mind. It arises in TDS Defaults, Refunds, Interest & Condonation and How Tax Law Is Read matters, on section 194A, section 194A(1), section 194A(3)(i), section 194A(3)(v), section 194A(3)(viia), section 194A(3)(ix), section 194A(3)(ixa), section 197A, section Rule 29C, section 206AA, section 197, section 44AB, section 36(1)(viii), section 10(23FC), section 193, section 201(1), section 201(1A) of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. If you are an individual or a HUF, check the preceding year's turnover before assuming you are outside the section. One crore rupees in business or fifty lakh rupees in profession brings you in, and those figures no longer follow the section 44AB audit limit. Aggregate across the whole bank, not branch by branch, wherever the bank has core banking solutions — the second proviso to clause (i) overrides the first. Count recurring deposits in, because Explanation 1 puts them inside “time deposits”. If you run a co-operative society, work out last year's turnover first. Above fifty crore rupees, clauses (v) and (viia) stop protecting you and you deduct once the interest to a payee passes one lakh rupees for a senior citizen or fifty thousand rupees for anyone else. For a Motor Accidents Claims Tribunal award, separate the interest credited from the interest paid. Credited interest is outside the section entirely under clause (ix). Paid interest is outside it only up to fifty thousand rupees in the financial year under clause (ixa) — a figure the Finance Act, 2025 did not raise. Do not treat a book entry as a deferral. The Explanation to sub-section (1) deems a credit to an ‘Interest payable’ or ‘Suspense’ account to be credit to the payee, so the duty arises when the entry is passed. If your tax for the year will be nil, file the declaration rather than waiting for a refund. Form No. 15G under section 197A(1A), or Form No. 15H if you are a resident individual aged sixty or more, under section 197A(1C) — both prescribed by rule 29C. Put your PAN on it; section 206AA(2) makes a declaration without a PAN invalid. Do not use Form No. 15G if the interest itself exceeds the maximum amount not chargeable to tax — section 197A(1B) shuts that door. Section 197A(1C) is drafted to override (1B), so Form No. 15H is not caught by the same cap. If your tax will not be nil but the full ten per cent is too much, that is a section 197 certificate in Form No. 13 under rule 28, not a section 197A declaration. For any interest credited or paid on or after 1 April 2026, read section 393(1) of the Income-tax Act, 2025, not this section.
Still good law. The text is that of the newest vintage available for this section, and the current figures are corroborated four ways, all agreeing. The 2026 and 2025 vintages both print fifty thousand, ten thousand and one lakh; the two 2024 vintages both print forty thousand, five thousand and fifty thousand - so the change falls exactly where a 1 April 2025 amendment puts it. Six footnotes on the 2026 text all credit Act No. 7 of 2025 with effect from 1 April 2025, and they cover all six places a figure moved. The Board's own Key Highlights of the Finance Act, 2025 states the same three pairs. And the Table in section 393(1) of the Income-tax Act, 2025 carries the same three figures. Nothing later has displaced the section: the Finance Bill, 2026 does not amend it. The earlier figures and their amending Acts come from the footnotes in the 2022, 2019 and 2018 vintages. Three limits on reliance. First, the amending Act and date that inserted clauses (ix) and (ixa), the two Motor Accidents Claims Tribunal limbs, could not be established: they are printed identically and without any footnote in every vintage read, so no insertion date is stated here. That the fifty thousand rupee figure in clause (ixa) is unchanged rests on five vintages reading alike, which is solid. Second, the ten per cent rate is taken from the departmental rates chart for assessment year 2026-27; Part II of the First Schedule to the Finance Act, 2025 could not be reached, so the rate stands on the chart's authority and not on the Finance Act's. Third, the section 197A text is of a 2025 vintage; no later one was found, and older texts of that section predate sub-sections (1B) and (1C) entirely and must not be cited. This describes a repealed Act. Section 536(1) of the Income-tax Act, 2025 repealed the Income-tax Act, 1961 from 1 April 2026, saving proceedings for earlier tax years. Section 194A is good law for interest credited or paid up to 31 March 2026 and spent for anything later, where section 393(1) of the 2025 Act governs. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
ON THE TEXT AND ITS CORROBORATION. The section is taken from the newest vintage available and checked figure by figure against the 2025 vintage and, for the position before the amendment, against both 2024 vintages. The footnotes reproduced in the body are quoted from the vintages named against each of them. THE WHOLE FOOTNOTE BLOCK on the newest text is six notes, all reading 'Sub. ... by Act No. 7 of 2025, w.e.f. 1-4-2025' - on the figures in sub-clauses (a), (b), (c) and (d) of clause (i), on both figures in the senior-citizen proviso, and on both figures in the co-operative society proviso. There is no footnote crediting any Act of 2026. TWO READINGS WERE TESTED AND REJECTED. It looked at first as though the single footnote in the 2018 vintage, on the senior-citizen proviso, also covered clauses (ix) and (ixa); on checking, that footnote sits at the opening of the 'Provided also' proviso and there is no footnote near either Motor Accidents Claims Tribunal clause, so no insertion date is claimed for them. And the proviso order in clause (i) was read in printed sequence - branch-wise aggregation, then the core-banking override, then the senior-citizen proviso - the override reading turning on the words 'the amount referred to in the first proviso'. WORK STILL OUTSTANDING ON THIS RECORD. The Finance Act that inserted clauses (ix) and (ixa) needs to be identified from the enacted Finance Act itself, which the consolidated texts do not name. Clauses (vi), (vii), (viii) and (x) of sub-section (3) are quoted only as far as they have been read, and the elisions are marked with an ellipsis. The ten per cent rate should be restated on the authority of Part II of the First Schedule to the Finance Act, 2025 rather than the departmental rates chart. Section 393(1) of the Income-tax Act, 2025 is the live provision from 1 April 2026 and deserves a record of its own; it is summarised here only so far as is needed to mark the boundary of this one. And the judgments in this library on section 194A have not been read against this statement of the text - where a judgment and this page appear to differ, the judgment governs. DELIBERATELY LEFT OUT. Disallowance under section 40(a)(ia) for a failure to deduct under this section, and the overlap with section 194N. Both belong on their own pages. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
As at 23 September 2026, and for deductions made up to 31 March 2026: WHO MUST DEDUCT. Section 194A(1) fastens the duty on “any person, not being an individual or a Hindu undivided family”. The gateway for individuals and HUFs is the proviso, and it is a turnover test on the preceding financial year: total sales, gross receipts or turnover exceeding one crore rupees in business or fifty lakh rupees in profession. Those two figures are themselves an amendment. Until 31 March 2020 the proviso read “exceed the monetary limits specified under clause (a) or clause (b) of section 44AB”; Act No. 12 of 2020 substituted the fixed figures with effect from 1 April 2020. The practical effect is that the section 194A duty is now pinned to one crore and fifty lakh and no longer moves when the section 44AB audit limit moves — which it has, upwards, several times. ON WHAT. “Any income by way of interest other than income by way of interest on securities”, paid to a resident. Interest on securities is section 193. Interest paid to a non-resident is section 195, not this section. WHEN. At credit or payment, whichever is earlier. The Explanation to sub-section (1) closes the obvious escape: crediting the amount to an “Interest payable account” or a “Suspense account”, or to any other account by any other name, is deemed to be credit to the payee's account. Book entries do not postpone the duty. There is no separate “payable” test in section 194A — the section works on credit or payment, and the Explanation makes credit to an internal account count as credit. THE RATE. “At the rates in force”, which for interest under section 194A is ten per cent; the departmental TDS rates chart for assessment year 2026-27 gives “10” per cent for income by way of interest other than interest on securities. There is no separate, lower rate for a senior citizen — what a senior citizen gets is a higher threshold, not a lower rate. THE THRESHOLDS, AND WHEN EACH LAST MOVED. Section 194A(3)(i) disapplies sub-section (1) where the aggregate of the interest credited or paid, or likely to be credited or paid, in the financial year does not exceed: — fifty thousand rupees, where the payer is a banking company, a co-operative society carrying on the business of banking, or a post office deposit scheme. Substituted for “forty” by Act No. 7 of 2025 — the Finance Act, 2025 — with effect from 1 April 2025. Before that it was forty thousand rupees, substituted for “ten” by the Finance Act, 2019 with effect from 1 April 2019. — one lakh rupees, where the payee is a senior citizen, for those same three sub-clauses. The senior-citizen proviso was inserted by Act No. 13 of 2018 — the Finance Act, 2018 — with effect from 1 April 2018, and originally lifted “ten thousand” to “fifty thousand”. The Finance Act, 2019 changed “ten” to “forty” in it with effect from 1 April 2019, and the Finance Act, 2025 then changed “forty” to “fifty” and “fifty thousand” to “one lakh”, both with effect from 1 April 2025. — ten thousand rupees in any other case. Substituted for “five” by Act No. 7 of 2025 with effect from 1 April 2025. This is the limb that catches an ordinary loan: interest paid by a company or a firm to a lender who is not a bank crosses the threshold at ten thousand rupees, not fifty thousand. A senior citizen, for this purpose, is defined by Explanation 2 to sub-section (3) as a resident individual aged sixty or more at any time during the relevant previous year. Two provisos control how the threshold is counted. The first aggregates branch by branch for time deposits with a bank, a co-operative bank, or a housing-finance public company eligible for section 36(1)(viii). The second overrides it: where the payer has adopted core banking solutions, the count is across the whole institution, not branch by branch. In 2026 essentially every bank has core banking, so the branch-wise reading in the first proviso is spent in practice — a depositor with six accounts at six branches of the same bank is aggregated across all six. Explanation 1 puts recurring deposits inside “time deposits” for clauses (i), (vii) and (viia). THE CO-OPERATIVE SOCIETY EXEMPTION, AND WHAT IS LEFT OF IT. Clause (v) exempts interest credited or paid by a co-operative society, other than a co-operative bank, to a member, and interest paid by one co-operative society to another. Clause (viia) exempts interest on deposits with a primary agricultural credit society, a primary credit society, a co-operative land mortgage bank or a co-operative land development bank, and interest on non-time deposits with other banking co-operative societies. The words “other than a co-operative bank” in clause (v) are the first limitation: a co-operative bank paying its members deducts like any other bank. The second limitation is the proviso printed at the end of sub-section (3), inserted by Act No. 12 of 2020 with effect from 1 April 2020. It switches clauses (v) and (viia) off entirely for a society that meets both conditions: turnover above fifty crore rupees in the preceding financial year, and interest to the payee above one lakh rupees for a senior citizen or fifty thousand rupees for anyone else. Those two interest figures moved with everything else — they were fifty thousand and forty thousand until 31 March 2025 and were substituted by the Finance Act, 2025 with effect from 1 April 2025. The fifty crore rupee turnover figure has not moved. So a large co-operative society is now a deductor, and a small one is not. The test is the society's own turnover, not the member's status. THE OTHER MAIN EXCLUSIONS. Clause (iii) takes out interest credited or paid to a banking company or a banking co-operative society (including a co-operative land mortgage bank), to a financial corporation established by or under a Central, State or Provincial Act, to the Life Insurance Corporation of India, to the Unit Trust of India, to any company or co-operative society carrying on insurance business, and to anything the Central Government notifies for recorded reasons. Clause (iv) takes out interest paid by a firm to its partner. Clause (xi) takes out interest referred to in section 10(23FC). THE MOTOR ACCIDENTS CLAIMS TRIBUNAL LIMBS. There are two of them and they work differently. Clause (ix) exempts interest “credited” on compensation awarded by a Motor Accidents Claims Tribunal, with no monetary limit at all. Clause (ixa) exempts interest “paid” on such compensation only where the amount, or the aggregate of the amounts, paid during the financial year does not exceed fifty thousand rupees. The split matters because interest on a tribunal award usually accrues for years and is credited long before it is paid: nothing is deducted while it sits, and the whole accumulated payment is tested against fifty thousand rupees in the year it is released. That fifty thousand rupee figure is the one threshold in section 194A that the Finance Act, 2025 did not touch, and it has stood unchanged since 2017. THE PAYER'S ADJUSTMENT. Section 194A(4) lets the person making the payment increase or reduce the amount deducted at any deduction “for the purpose of adjusting any excess or deficiency arising out of any previous deduction or failure to deduct during the financial year”. The permission is confined to the financial year; it is not a licence to fix last year's short deduction in this year's. THE DECLARATION ROUTE. Section 197A(1A) lets a person who is not a company or a firm stop a section 194A deduction by furnishing the payer a declaration, in duplicate, that the tax on his estimated total income for the year will be nil. Rule 29C(1) prescribes Form No. 15G for that. Section 197A(1B) then caps it: the section does not apply at all where the income in question, or the aggregate of such incomes, exceeds the maximum amount not chargeable to income-tax. Section 197A(1C) is the senior citizen's own route — a resident individual aged sixty or more — and it opens “Notwithstanding … sub-section (1B) of this section”, so the cap in (1B) does not bind him. Rule 29C(1) prescribes Form No. 15H for that declaration. The cap is not the only difference between the two forms, and the other one is easy to miss. The lists of covered sections are not the same. Section 197A(1A) runs on sections 192A, 193, 194A, 194D, 194DA, 194-I and 194K. Section 197A(1C) runs on all of those and, in addition, on section 194 and section 194EE. So Form No. 15H reaches dividends under section 194 and payments out of National Savings Scheme deposits under section 194EE, which the section 197A(1A) limb of Form No. 15G does not. Form No. 15G is not confined to sub-section (1A) either: rule 29C(1) gives it to a declaration “under sub-section (1) or under sub-section (1A)”, and section 197A(1) is the section 194 and section 194EE route open to any resident individual. For section 194A, which is the provision this record is about, both routes lead to the same place — a non-company, non-firm payee uses Form No. 15G subject to the (1B) cap, and a resident individual of sixty or more uses Form No. 15H free of it. Section 206AA(2) makes any such declaration invalid unless it carries the declarant's PAN, and section 206AA(3) then sends the deductor back to the section 206AA(1) rate. THE OTHER ROUTE. Section 194A is one of the sections named in section 197(1), so a payee who wants a lower rate rather than nil, or who cannot say his tax will be nil, applies to the Assessing Officer in Form No. 13 under rule 28 instead. WHAT CHANGED, AND WHEN, IN SHORT: — 1 June 1992: sub-section (2) omitted by the Finance Act, 1992. — 1 April 2018: senior-citizen proviso inserted in clause (i) by Act No. 13 of 2018, at fifty thousand rupees against a then base of ten thousand. — 1 April 2019: “ten” substituted by “forty” in sub-clauses (a), (b) and (c) and in the senior-citizen proviso by the Finance Act, 2019. — 1 April 2020: the section 44AB cross-reference in the sub-section (1) proviso replaced by fixed figures of one crore and fifty lakh rupees, and the co-operative society proviso inserted, both by Act No. 12 of 2020. — 1 April 2021: clause (x) amended by Act No. 13 of 2021. — 1 April 2025: all six threshold figures substituted by Act No. 7 of 2025 — fifty for forty, ten for five, fifty for forty and one lakh for fifty thousand in the senior-citizen proviso, and one lakh for fifty thousand and fifty for forty in the co-operative society proviso. — The Finance Bill, 2026 (Bill No. 3 of 2026) contains no clause amending section 194A, and no 2026 Act has amended it. — 1 April 2026: the Income-tax Act, 1961 was repealed by section 536(1) of the Income-tax Act, 2025 (Act No. 30 of 2025). The successor is section 393(1) of the 2025 Act. In section 393(6) of the 2025 Act the Table at serial number 5(ii) sets the threshold for a banking company, a co-operative society carrying on banking business or a post office at “₹ 1,00,000 in the case of a senior citizen; ₹ 50,000 in case of person other than senior citizen” at rates in force, and serial number 5(iii) sets ₹ 10,000 for a specified person other than those. That Table was itself amended by Act No. 4 of 2026 with effect from 1 April 2026, but the three interest figures came through unchanged from the 1961 Act. The declaration route carries over into section 393(6), which is to be renumbered as section 393(6)(a) by Act No. 4 of 2026 with effect from 1 April 2027, so quote the sub-section number with that date in mind.
TaxSphere, “Statutory position — s.194A: tax on interest other than interest on securities, with the threshold at ₹50,000 for a bank, co-operative bank or post office, ₹1,00,000 for a senior citizen and ₹10,000 in any other case — the 1961 Act position from 1 April 2025 to 31 March 2026”, https://taxnotice.vittsphere.com/caselaw/case/statutory-position-194a-interest-thresholds-and-the-co-operative-society-gateway/ (validity last checked 2026-09-23)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
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We are a co-operative bank. The TDS officer says we should have deducted tax under s.194A on fixed deposit interest paid to co-operative housing societies that are not our members, and has treated us as an assessee in default. Is he right?
Our co-operative society pays interest to members, to other co-operative societies and to outsiders. Which of these payments carry a TDS obligation under s.194A?
The department has raised s.201 demands on our co-operative bank for not deducting tax on time deposit interest paid to members in years before June 2015. Does the Finance Act 2015 amendment to s.194A(3)(v) apply to those years?
My money is stuck. Every invoice I raise has tax deducted at the full rate, my actual tax for the year is far less than the deductions, and I only get it back a year later when the refund comes. Somebody told me to apply for a lower-deduction certificate under section 197. What does section 197 actually say — which payments does it cover, what does the Assessing Officer have to be satisfied about, what form do I file, and can the certificate be backdated to cover the deductions already made?
